Government increases the taxes on car ownership. Explain the possible market outcomes of such a decision.
As this is a tax paid by owners, and therefore not levied indirectly via suppliers in selling cars, one can expect reduce in the demand for cars and enhance in demand for possible substitutes. (Basically, the ownership tax may be regarded as a complement to car ownership.) One could also expect a reduce in demand for complement goods for cars, like gasoline, insurance, servicing, etc